If purchasing power parity holds, the price level in Turkey is 210, and the nominal exchange rate (E) = 0.84 Turkish lira =
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Coupon rate is the yearly interest earned by a loan and it can be calculated with
where i is the annual interest and p is the par value of the bond or the initial loan amount.
For this particular case, since the semiannual payment is $28.50, then the annual payment is 2 x 28.50 = $57.00.
Thus, we have
From this, the coupon rate is 0.057 x 100% = 5.7%.
Answer: 5.7%
where i is the annual interest and p is the par value of the bond or the initial loan amount.
For this particular case, since the semiannual payment is $28.50, then the annual payment is 2 x 28.50 = $57.00.
Thus, we have
From this, the coupon rate is 0.057 x 100% = 5.7%.
Answer: 5.7%